Jan. 23 (Bloomberg) -- When Reince Priebus was first
elected chairman of the Republican National Committee two years
ago, he inherited a party plagued by debt and internal
squabbles. His party is no longer in debt, although its future
is less certain and it’s filled with even more angst.

Priebus, 40, who is slated to be re-elected to a second
two-year term this week at a RNC meeting in Charlotte, North
Carolina, will need to confront those challenges after a 2012
election in which Republicans failed to defeat President Barack
Obama and lost House and Senate seats.

“It’s a pretty unenviable job that he’s going to have,”
said Gentry Collins, a Republican strategist in Washington who
is a former RNC political director. “He’s facing a party that
clearly has to reinvent the way it approaches campaigns.”

He must do that while navigating around Tea Party movement
leaders who have threatened retribution for Republican
congressional support of a tax increase passed this month, an
intra-party geographic divide made wider by the 2012 elections
and demoralized activists who thought they would beat Obama
because of high unemployment.

With only a third of Americans viewing the party favorably,
Republicans risk further electoral losses if they fail to
broaden their appeal among Hispanics, a rapidly growing portion
of the electorate, and younger voters, who represent the next
generation of voters. To regain parity, they’ll also need to
match Democratic superiority when it comes to using technology
to reaching out to voters and getting them to the polls.

Digging Out

In an interview, Priebus said his biggest accomplishment
during his first term was ridding the RNC of roughly $20 million
in debt. He also said the national party shouldn’t be blamed for
November’s losses.

“People believe that in the 18 months we had to resurrect
a disaster here, we did a pretty good job,” he said. “That
doesn’t mean that four years from now people aren’t going to
expect a much better operation between the party and the
nominee.”

In an e-mail to supporters after the election, Priebus made
clear that he has more support than needed to keep his job,
backed by at least 130 of 168 committee members, far more than
the simple majority required.

Mark Willis, an RNC member from Maine, is expected to
challenge Priebus. Willis lost his slot as a delegate at the
Republican National Convention in August because of his
outspoken support for presidential primary candidate Ron Paul
over Republican nominee Mitt Romney. There are also questions
about whether Willis can run for chairman because failure to
support the party’s presidential nominee is grounds for removal
from the committee under RNC rules.

Fundraising Success

Priebus’ popularity among committee members can partly be
attributed to his success in restoring the party’s financial
strength. The RNC raised almost $300 million during 2012 and
ended the year with about $3 million in the bank, according to
Federal Election Commission records. The annual total was
boosted by Romney’s aggressive fundraising efforts.

When Priebus took over the RNC in January 2011, he said he
had to use his personal credit cards for travel and expenses
because the committee’s two cards had been suspended for lack of
payment. At times, he said, upwards of $25,000 was charged on
his cards.

“We’d charge it up and pay it off and charge it up and pay
it off,” he said.

Steele’s Gaffes

To win the chairmanship, Priebus defeated then-chairman
Michael Steele, who had become caught up in controversies about
how he managed the party. During his tenure, Steele often was in
the spotlight for verbal gaffes and statements that were
controversial within the party.

In February 2009, Steele said he opposed a constitutional
ban on abortion, before later issuing a statement to try to show
his allegiance with anti-abortion rights party activists who
were angered.

Steele faced more criticism after financial reports showed
that in February 2010, the party paid almost $2,000 for meals at
a bondage-themed nightclub in West Hollywood, California, that
featured topless dancers.

RNC member Henry Barbour of Mississippi, who backed Priebus
over Steele, said the new chairman has reformed the party’s
internal workings.

‘Brought Stability’

“He brought stability, maturity, raised the money and
controlled costs and stayed within himself as a messenger,” he
said. “RNC members have a real appreciation for the job he’s
done, despite the Republican loss at the top of the ticket.”

Mike Kopp, an RNC member from Colorado, put it this way:
“It’s like a football coach that lost in the first game of the
playoffs. He has had significant success to build on.”

Priebus will also have to address the demographic and
technological shortfalls with Democrats that were spotlighted in
November’s election.

Exit polls of voters in the Nov. 6 election showed Obama
dominated Romney among single women, Hispanics, blacks and
younger voters as the president carried eight of nine states
both camps viewed as the most competitive.

Republicans have also acknowledged Obama’s campaign used
superior technological tools for online fundraising and get-out-the-vote efforts.

“While we were debating each other in primaries and
digging out of debt, you had Barack Obama, who is spending $100
million on data and technology,” Priebus said. “We did a
pretty good job running a nine-month campaign. And Barack Obama
did a pretty good job running a four-year campaign.”

Study Group

Republicans have initiated a study of how the party can
improve its image and performance. The Growth and Opportunity
Project will focus on messaging, fundraising, demographic
outreach, the primary process and the role of third parties.

Priebus appointed five party leaders to head the group,
including Barbour, who is the nephew of former RNC Chairman
Haley Barbour, and Ari Fleischer, White House press secretary
under President George W. Bush. Rounding out the group is Zori
Fonalledas of Puerto Rico and Glenn McCall of South Carolina --
both RNC members -- and political strategist Sally Bradshaw, a
longtime consultant to former Florida Governor Jeb Bush.

As he awaits the group’s findings -- perhaps as soon as
March -- Priebus said he expects the party will have to raise
and spend more money in non-election years.

Changing Mindset

“It means changing the mindset of both our grassroots and
our donors in that the opportunities to give are not in
presidential years,” he said. “We’re going to have to sell
that concept across the country, that if you want to have a
party that can go toe-to-toe with an incumbent president, you’re
going to have a party that is granular and funded with a lot of
people on the ground all the time and that’s expensive.”

Those extra resources would be used to register new voters
and woo independent ones, plus look for ways reach out to
Hispanics, youth, women and others “on a year-around basis that
brings our party to the community level,” Priebus said.

He’d also like to see fewer candidate debates than the more
than 20 held in 2011 and 2012 during the Republican primary.

“We ought to control who the moderators are and what
companies are running the debates,” he said.

Priebus, a former Wisconsin party chairman who is close to
Governor Scott Walker there, dismissed suggestions that the
party is lacking high-profile leaders.

“If you look at the Republican bench right now, at
governors and leaders here in Washington and across America, our
future is enormously bright. And we just have to do a better job
talking about it, bragging about it and messaging through these
leaders for the next couple years,” he said.